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As return to speculative development on any significant scale across UK looks highly improbable in the short-term
Leeds, 24 October 2012 –Yorkshire’s property market looks set to capitalise on the continued decline in large new build industrial space being developed speculatively across the UK according to property consultants Jones Lang LaSalle.
Speaking at the firm’s breakfast presentation today, Richard Harris, head of Jones Lang LaSalle’s Industrial & Logistics team in Leeds, said that in the short term the current economic climate made a return to speculative development on any significant scale highly improbable and occupier demand, whilst subdued, has continued to lead to the absorption of prime vacant space.
Richard said: “Despite a weak start to the year, and a slowdown in activity over the summer months, occupiers continue to be faced with lease expiries, consolidation, merger and expansion issues which in turn have led to a fall in available supply. At the end of September our research shows that availability of new Grade A space across the UK is down 70% on in its pre-recession peak.”Richard continued: “Yorkshire currently has a relatively high level of new speculative supply with 2.8 million sq ft of large warehouse units available across the region which accounts for one third of all UK stock.
“Set against a back drop of an acute shortage of new Grade A space in some other parts of the country, industrial occupiers clearly have the option to look to Yorkshire to satisfy their requirements for existing good quality floor space. Whilst enquiry levels remain unpredictable, we believe increased take-up of these there will be increased take-up of these big box facilities due to limited stock in areas such as the North West and Midlands.”
The property consultant says that on both a local and national basis manufacturing has been a major driver behind demand for space throughout 2012 with the automotive sector performing particularly strongly. However, logistics companies took the largest share in floorspace during the first half of the year.
Richard concluded: “Regionally, whilst demand has been steady rather than spectacular, we have seen good levels of take-up in the big box market of both new and existing stock. A lack of new development will however hold the market back.”
Philip Overend, associate director in Jones Lang LaSalle’s Leeds office, spoke about the Energy Act 2011 and the issues it will present to commercial landlords over the next few years.
Philip said: “From April 2018 it will be unlawful for landlords to let properties with an Energy Performance Certificate (EPC) rating of F or G. Currently, around 20% of commercial properties fall into this category, however tightening of the Building Regulations in 2013 and 2016 and new releases of the EPC software will continue to make it harder to achieve the EPC bands of A, B, C, D etc. This issue will therefore affect a growing proportion of property up to and beyond 2018.
“Prudent landlords should now be reviewing their portfolios, to identify the ‘at risk’ properties. If landlords pro-actively assess the issue now and obtain strategic property consultancy advice, any costs to improve a building’s rating level can be both mitigated and spread into the normal cycle of lease expiries and refurbishments. An informed landlord may then not need to ‘sell, sell, sell’ inefficient property in a market with a weak appetite for it; the key will be to examine each property on its own merits."
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